* Merkel says rules of game can’t be changed pre-ESM
* Merkel says Germany has benefited great from euro (Adds quotes, background)
BERLIN, May 25 (Reuters) - Chancellor Angela Merkel said on Wednesday that it was of “existential importance” to Germany that the European bloc’s new rescue mechanism include provisions for private sector participation in future debt relief.
But Merkel appeared to reject the idea of any debt restructuring before the new facility — the European Stability Mechanism (ESM) — becomes operational in 2013, signalling that the conditions attached to existing bonds should not be changed.
“We have decided on a long-term euro mechanism. And for Germany it is of existential importance that it foresees private sector participation in the event countries are judged insolvent,” Merkel told a party conference of her Christian Democrats (CDU) in Berlin.
Merkel said, however, that before the ESM was up and running “the rules cannot be changed.” Other European policy makers have called for a “voluntary” restructuring of Greek debt to help the country bridge a funding gap that looms next year.
Germany wants clear language in the ESM on private sector burden sharing and the inclusion of so-called collective action clauses in bonds issued by euro zone members from the middle of 2013.
But some other countries within the bloc want this language watered down and placed in the preamble of the ESM document rather than within the articles that form the legal heart of the mechanism.
Merkel also made clear that troubled euro countries must be given time to return to a primary surplus and restore their competitiveness.
She said a strong euro was important and that Germany had benefited a great deal from the single currency. (Reporting by Brian Rohan and Noah Barkin; Editing by Leslie Adler)